Cornwall Mobile Detailing (CMD) is a service that washes and details a customer's vehicle at their home or office. It operates on a hembership basis. Members pay $800 dues per month, which entitle them to a complete wash and detail service monthly. Memb hay also order additional car washes during the month at a fee of $105. Additional washes are common in both summer and wint months. The number of members also varies with the season. The number of members and the average number of additional was y members for the months of interest follow: Additional Washes (Average January February Members 420 per Member) 1.4 480 1.7 March 1,040 1.3 April May 1,180 1.2 June 1,210 1,360 1.5 2.0 Cornwall allows members to pay for dues on credit. Cornwall's experience is that 40 percent of its members pay cash for the dues ercent of the members pay the dues for a month in the next month, 5 percent in the second month after. The remainder is ncollectible. Additional washes are payable in cash. Cornwall estimates that the number of members in July should increase 20 percent above June levels, and the number of additio vashes per member should increase by an estimated 12.5 percent. The following information is available for costs incurred in Jun
Cornwall Mobile Detailing (CMD) is a service that washes and details a customer's vehicle at their home or office. It operates on a hembership basis. Members pay $800 dues per month, which entitle them to a complete wash and detail service monthly. Memb hay also order additional car washes during the month at a fee of $105. Additional washes are common in both summer and wint months. The number of members also varies with the season. The number of members and the average number of additional was y members for the months of interest follow: Additional Washes (Average January February Members 420 per Member) 1.4 480 1.7 March 1,040 1.3 April May 1,180 1.2 June 1,210 1,360 1.5 2.0 Cornwall allows members to pay for dues on credit. Cornwall's experience is that 40 percent of its members pay cash for the dues ercent of the members pay the dues for a month in the next month, 5 percent in the second month after. The remainder is ncollectible. Additional washes are payable in cash. Cornwall estimates that the number of members in July should increase 20 percent above June levels, and the number of additio vashes per member should increase by an estimated 12.5 percent. The following information is available for costs incurred in Jun
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cornwall Mobile Detailing (CMD) is a service that washes and details a customer's vehicle at their home or office. It operates on a
membership basis. Members pay $800 dues per month, which entitle them to a complete wash and detail service monthly. Members
may also order additional car washes during the month at a fee of $105. Additional washes are common in both summer and winter
months. The number of members also varies with the season. The number of members and the average number of additional washes
by members for the months of interest follow:
Additional
Washes (Average
per Member)
Members
January
February
420
1.4
480
1.7
March
1,040
1.3
April
May
1,180
1.2
1,210
1,360
1.5
2.0
June
Cornwall allows members to pay for dues on credit. Cornwall's experience is that 40 percent of its members pay cash for the dues, 50
percent of the members pay the dues for a month in the next month, 5 percent in the second month after. The remainder is
uncollectible. Additional washes are payable in cash.
Cornwall estimates that the number of members in July should increase 20 percent above June levels, and the number of additional
washes per member should increase by an estimated 12.5 percent. The following information is available for costs incurred in June. All
costs except depreciation are paid in cash.
Service costs
Variable costs
Equipment maintenance
Depreciation (fixed)
Total
Marketing and administrative costs
Marketing (variable)
Administrative (fixed)
Total
Total costs
$ 47,000
43,000
81,000
$ 171,000
$ 35,000
108,000
$ 143,000
$ 314,000
Variable service and marketing costs change with volume, measured by number of members. Fixed depreciation will remain the same,
but fixed administrative costs will increase by 10 percent beginning July 1. Equipment maintenance is outsourced and the contract calls
for a 5 percent increase beginning July 1.
Required:
Prepare a budgeted income statement for July.
Note: Do not round intermediate calculations. Enter your answers rounded to the nearest whole dollars.
Cornwall Mobile Detailing
Budgeted Income Statement
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